ON Semiconductor Reports Significant Decline in Q2 and First Half of 2025 Financial Performance

ON Semiconductor Corporation reported a significant decline in its financial performance for the second quarter and first half of 2025, as detailed in its latest 10-Q filing. For the quarter ended July 4, 2025, the company generated revenue of $1,468.7 million, a decrease of approximately 15% from $1,735.2 million in the same quarter of the previous year. The gross profit also fell sharply to $551.9 million, down from $784.0 million, reflecting a gross margin decline from 45.2% to 37.6%. The net income attributable to ON Semiconductor Corporation was $170.3 million, compared to $338.2 million in the prior year, resulting in a basic earnings per share of $0.41, down from $0.79.

The company's financial results for the first half of 2025 were similarly affected, with total revenue of $2,914.4 million, down 19% from $3,597.9 million in the first half of 2024. The gross profit for this period decreased to $845.7 million from $1,637.6 million, leading to a net loss of $315.8 million, compared to a net income of $791.2 million in the prior year. The decline in revenue and profitability was attributed to decreased demand in the automotive and industrial end-markets, which impacted all three of the company's reportable segments: Power Solutions Group (PSG), Analog and Mixed-Signal Group (AMG), and Intelligent Sensing Group (ISG).

Strategically, ON Semiconductor has been active in restructuring its operations. The company initiated a 2025 Manufacturing Realignment Program, which included the termination of approximately 2,400 employees and resulted in significant non-cash impairment charges totaling $472.1 million for the first half of 2025. The restructuring efforts are aimed at aligning manufacturing capacity with anticipated long-term needs and optimizing operational efficiencies. Additionally, the company completed the acquisition of the SiC JFET technology business from Qorvo US, Inc. for $118.8 million, which is expected to enhance its product offerings in the power solutions segment.

Operationally, ON Semiconductor's customer base remains concentrated, with one distributor accounting for approximately 12% of total revenue in both the current and prior year quarters. The company reported a decrease in its inventory levels, with total inventories at $2,087.1 million as of July 4, 2025, down from $2,242.0 million at the end of 2024. The company also repurchased approximately 6.9 million shares of its common stock during the quarter for a total cost of $303.0 million, as part of its ongoing share repurchase program.

Looking ahead, ON Semiconductor's management expressed cautious optimism, emphasizing their focus on generating operating cash and returning capital to shareholders while navigating the challenges posed by geopolitical and macroeconomic factors. The company aims to achieve revenue growth with stable gross margins by capitalizing on high-growth trends in its primary end-markets. However, the outlook remains contingent on market conditions and the successful execution of its restructuring initiatives.